Your Tenant Filed for Bankruptcy – What Should You Do?

When financial burdens become too much and tenants fall behind on their rent – they may be forced to file for bankruptcy. This can be extremely frustrating for everyone involved. As a landlord – what are the steps that you should be taking after your tenant files for bankruptcy?

In the past, tenants could avoid eviction by invoking “automatic stay” – a policy that allowed all collection proceedings to stop, allowing them to stay in their apartment until a judge lifted the automatic stay policy. Fortunately, The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was enacted to helps make it easier for you, as a commercial landlord, to evict a bankrupt tenant. Now, you can proceed with eviction if you have already obtained a judgment of possession prior to the tenant filing for bankruptcy or there was an eviction based on endangerment (i.e. illegal use of substances, they had a pet when they were not allowed).

What You Should Do:

If you have not won a judgement for eviction before your tenant filed for bankruptcy, you will need to set a hearing to remove the automatic stay.

Set a Date for a Hearing to Remove Automatic Stay. During this hearing, you will need to ask the judge to remove the automatic stay before you can evict the tenant.

If you know that your tenant has used illegal drugs or has endangered the property, you can proceed with the eviction.

If a tenant falls under this exception, you do not need to win a judgement. Instead, you can proceed with the eviction. You will need to prepare a certification that the tenant has violated this – and if they do not file an objection to it within 15 days of being served, you can proceed without going to court.

At Thomas Weiss & Associates, P.C., we are experienced in handling all matters related to property disputes and transactions. We handle everything from mortgage foreclosure actions to landlord/tenant dispute. If you find yourself in need of legal assistance, do not hesitate to reach out to our office by calling 1-516-746-7452 or by visiting our website and filling out our contact us form.